Govt defends 7.8% GDP growth, says consumption, investment remain strong

The government has defended India’s 7.8% GDP growth in the April-June quarter, saying the strong print reflects robust consumption and healthy investment across the economy.India’s economy grew 7.8% year-on-year in Q1FY27, according to data released on August 31, matching the growth recorded in the previous quarter and accelerating from 6.8% in the year-ago period.The print was ahead of the 7.5% estimate in the CNBC-TV18 poll of economists. GVA grew 8.2%, while gross fixed capital formation rose 11.9% and private final consumption expenditure increased 7.1%. Nominal GDP growth stood at 10.3% during the quarter.Manufacturing emerged as a key growth driver, expanding 9.2% in Q1 FY27, compared with 8.3% a year earlier. The latest estimates were released under the revised GDP series, which uses 2022-23 as the base year and incorporates updated data sources, price indices and methodologies.The government has since issued detailed clarifications on questions around the revisions and the interpretation of the latest numbers.The government said growth in services such as real estate, construction, retail trade and tourism has been particularly encouraging. Gross fixed capital investment remains healthy at around 12%, driven by spending by the government, public sector and corporates.Household consumption and investment trends also show continued confidence in the Indian economy, it said.The government’s comments come amid questions over the latest GDP estimates, including revisions to previous-year numbers and differences between GDP inflation and CPI or WPI inflation.On comparisons of nominal GDP across years, the government said such comparisons should be made at constant prices, calling comparisons based on current prices “apples and oranges”. It said revisions to the GDP series reflect updated data, methodologies and the shift to the 2022-23 base year, rather than an attempt to mechanically boost the latest growth rate.The government also pointed to trends in automobile, steel and cement output as providing a clearer picture of underlying economic activity.On the growth outlook, the government said it was too early to speculate on whether a higher growth base would make next year more challenging. It noted that the Indian economy has consistently grown between 7% and 8% over the past three years and said it sees no reason for growth momentum to be materially different going ahead.The policy focus, it said, remains on further improving growth rates in line with the Viksit Bharat 2047 vision.

Source link